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UPDATE 1-Yara buys Brazilian fertiliser firm in $750 mln deal
December 7, 2012 / 8:16 AM / in 5 years

UPDATE 1-Yara buys Brazilian fertiliser firm in $750 mln deal

* Buys business from Bunge to boost products, distribution

* Expects $25 mln in synergies by 2014

* Analyst: pricing fair, acquisition fits well

OSLO, Dec 7 (Reuters) - Norway’s Yara has agreed to buy the Brazilian fertilizer business of commodities giant Bunge in a deal valued at $750 million, giving it a wider product range and distribution network in a key market.

Yara, the world’s biggest maker of nitrogen-based fertilisers, will buy Bunge’s brands, warehouses and 22 blending facilities, and has also agreed on a long-term supply deal with the U.S. firm, the companies said on Friday.

Bunge’s Brazilian unit buys fertiliser on the market and blends it into different qualities, tailoring the product based on customer needs.

It also has 350,000 tonnes of production capacity, a boost for Yara which needs to add 4 million tonnes of capacity to its 20 million tonne output to meets its ambitious 2016 target.

“This acquisition fits like a glove,” equity analyst Per Haagensen at brokerage Fondsfinans said. “And the price looks fair. If they get the synergies, it is a very good price.”

The deal has an enterprise value of $750 million, including net operating capital value of $385 million and other assets valued at $365 million, and Yara expects to achieve $25 million in synergies by 2014.

Bunge’s Brazilian fertilizer business had revenues of $2.6 billion in 2011 and earnings before interest, taxes, depreciation and amortization (EBITDA) of $77 million.

Yara is expanding as tight grain markets drive strong demand for fertilisers and Asia’s rapid industrialisation support long term growth.

But falling coal prices have made it cheaper to produce fertilisers in China, putting pressure on global prices.

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